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Blockchain Technology

11.1  INTRODUCTION

Petroleum and natural gas are the primary energy sources that play a significant role

in regulating a country’s economic and social growth (Arya and Honwad, 2018b).

Globally, 57% of all energy consumption comes from petroleum and gas exploita­

tion. Over the next few decades, the petroleum and natural gas industry will thrive in

the global energy sector. British Petroleum (BP) Energy Outlook 2019 states that the

world is actively promoting new energy sources like wind, solar, biomass and hydro­

gen, but by 2040, half of the world’s energy requirement will continue to be satisfied

through petroleum and gas consumption only (BP Energy Outlook, 2019). Petroleum

and gas reserves have played an essential part in the energy business. Typical explo­

ration equipment, refineries and pipeline facilities have sophisticated facilities that

must be carefully planned (World Economic Forum and Accenture, 2017; Fraser

et al., 2018). However, the industry has a relatively old control system with poor

performance, high cost and high-risk characteristics. Petroleum and gas companies

have been prone to cyber threats. In the upstream market, machine monitoring has

become complex. There were also data loss concerns. Inadequate evidence leads to

poor decisions. There have been issues in handling duplicate data in the midstream

sector, which has led to delayed transactions. In the downstream industry, integrity

and security are significant challenges. Figure 11.1 shows some of the consequences

of the lack of blockchain in the petroleum and gas sector.

These issues have triggered the petroleum and gas industry to search for a com­

paratively new technology that may improve management decisions. In these circum­

stances, blockchain technology has incredible benefits in the petroleum and gas sector.

Figure 11.2 demonstrates that we can strengthen the existing processes inside the

energy field by integrating blockchain technologies. In 2008, the invention of Bitcoin

contributed to a surge in blockchain technology development (Midstream companies

and oil and gas downturn Deloitte insights, 2019). As the petroleum and gas industry

has faced massive challenges in protecting against the ever-looming cyber-attacks and

cyber hacking risks, BP started looking into blockchain technology implementation.

The move was an initial step towards adopting blockchain technologies in the petro­

leum sector. In 2018, a global blockchain survey conducted by Deloitte revealed that

61% of the petroleum and gas respondents understand that “blockchain is just a ledger

and a program for financial assistance” (Deloitte global blockchain survey, 2018).

11.5.1 Evolution............................................................................................ 193

11.5.2 Data Theft..........................................................................................194

11.5.3 Greedy Exploitation...........................................................................194

11.6 Possible Future Directions............................................................................. 195

11.6.1 Testing Blockchain............................................................................ 195

11.6.2 Incentivize Decentralization.............................................................. 195

11.6.3 Large (Data-based) Analytics............................................................ 195

11.6.4 Intelligent/Smart Contract.................................................................196

11.6.5 Artificial Intelligence.........................................................................196

11.7 Conclusion.....................................................................................................196

References...............................................................................................................197